Natural Gas Price Prediction – Prices Remained Buoyed as Demand Rises

Natural gas prices remained buoyed following a smaller than expected build in natural gas inventories which was reported by the Energy Information Administration on Thursday. There are no tropical cyclones expected to form in the Atlantic or Gulf of Mexico over the next 48-hours according to the National Oceanic Atmospheric Administration (NOAA). Separately, NOAA expects the weather in the US to be normal over the next 8-14 days. Both supply and demand for natural gas were higher this week according to the EIA.

Technical Analysis

Natural gas prices remained buoyed near resistance near the 10-day moving average at 2.14. Support on natural gas is seen near the August lows at 2.03. Short term momentum has turned positive as the fast stochastic recently generated a crossover buy signal. Prices have moved up from oversold territory and are now printing a reading of 33, above the oversold trigger level of 20. Medium-term momentum is neutral. The MACD (moving average convergence divergence) histogram is printing in the red with a flat trajectory which points to consolidation.

Supply and Demand Moved Higher

Supply rises generating record-high dry natural gas production. According to data from the EIA, the average total supply of natural gas rose by 1% compared with the previous report week. Dry natural gas production grew by 1% compared with the previous report week, reaching an all-time high of 92.1 billion cubic feet per day on Monday, the first time dry gas production has surpassed 92 Bcf per day. Average net imports from Canada decreased by 9% from last week.

Demand rises and power burn reaches a record high. Total US consumption of natural gas rose by 1% compared with the previous report week, according to data from the EIA. Natural gas consumed for power generation climbed by 3% week over week, reaching an all-time high of 44.4 Bcf per day according to the EIA. Industrial sector consumption decreased by 2% week over week. In the residential and commercial sectors, consumption increased by 4%. Natural gas exports to Mexico increased by 1%.

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